NU Online News Service, June 2, 1:25 p.m. EDT

The Texas legislature passed legislation reauthorizing the Texas Department of Insurance (TDI), but did not act on separate legislation to reform the state's last-resort wind insurer, the Texas Windstorm Insurance Association (TWIA).

Joe Woods, vice president, state government relations for the Property Casualty Insurers Association of America (PCI), says the TDI, like all state agencies, has to go through a sunset review process every 12 years. Two years ago, he explains, a reauthorization bill got caught up in a last-week filibuster and died. The legislature approved a two-year extension, and the program was reviewed again this year.

Woods calls the legislation a "pretty bare-bones reconstitution of TDI." One of the few changes, he says, was to clarify what additional information the department can ask for when insurers file rates. Texas, Woods says, is a file-and-use state but the department uses its authority similar to a prior approval system.

Woods says the department would not issue flat out rejections of filed rates, but would haggle with insurers to get adjustments to the filings.

In the reauthorization bill, the legislature put in a 30-day deadline for the department to review filed rates for auto and homeowners insurance. If necessary, the department may seek a maximum 30-day extension.

Previously, Woods says, rates could have been filed for two years before the department would begin to ask for additional information.

Separately, the legislation did not act on TWIA reforms, which Woods says has become a game of "multi-dimensional chess" between inland interests, coastal interests, lawyers and the insurance industry.

He says that two years after Hurricane Ike in 2008, TWIA was still receiving claims. Additionally, attorneys were bringing lawsuits against TWIA for unfair claim settlement practices. The lawsuits would seek treble damages, attorney fees and interest, Woods says, noting that the lawsuits were treating TWIA as an insurance company.

Woods notes that TWIA is not an insurance company and has no profit motive. "They don't have a dog in the fight other than to process claims," he notes.

The reform legislation would have addressed both issues—stipulating that claims must be filed within one year of the date of loss, and limiting lawsuits that can be brought against TWIA.

Woods says the bill passed the House and later passed the Senate in a "watered-down form," but ultimately legislators were unable to reach an agreement on final legislation.

A 30-day special session began two days ago to address Medicaid and school finance, Woods says, and the industry is hoping the governor will add TWIA reform to the agenda. If it is not added, reforms could not be passed for another two years.

Special Reports /

Texas Legislature Reauthorizes TDI, Does Not Pass TWIA Reforms

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